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Renewable EnergyMyth or Reality
Ricardo L. RamosEarthshine Corp.
6th International Energy Symposium – PREC ‐ IPP
February 20, 2014Gurabo, PR
Reality (World)
0
50
100
150
200
250
2001 2003 2005 2007 2009 2011 2013 2015
Cumulative Installed Global Capacity (GW)
66% of PV capacity installed globally was connected in the past 2.5 years
Cumulative installed PV will nearly double in the next 2.5 years
Source: GTM Research
Two thirds of the global solar PV capacity has been installed in the last 2.5 years. Installed capacity is projected to double by 2016 to reach 200+ GW.
Fundamentals
• Puerto Rico has the basic fundamentals to make renewable energy a reality:– No native energy sources ‐ High cost of energy– Good Irradiance– Challenges in meeting environmental compliance– Need for economic development and job creation– Highly trainable technical workforce
Fuel Price Projections Non‐Native Energy Sources
0.00
5.00
10.00
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20.00
25.00
30.00
35.00
40.00
45.00
50.00
12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
$/mmBtu
DOE Fuel Forecast
Oil #6
Nat Gas (US)
Diesel
Nat Gas Atl. Basin
Coal
Cost ComparisonGas From USA in 2019
5.00
10.00
15.00
20.00
25.00
30.00
12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Cents/kW
h
Year
Production Costs
PREPA Prod. Cost
Renewables
SJSP CC (5&6) with GasGas from USA intoSOUCO, Aguirre and San Juan
Aguirre Gas PortGas From AtlanticBasin
5.00
10.00
15.00
20.00
25.00
30.00
35.00
12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Cents/kW
h
Year
Production Costs
PREPA Prod. Cost
Renewable Portfolio
Cost ComparisonNo Gas from USA
Aguirre Gas PortGas From AtlanticBasin
SJSP CC (5&6) with Gas
Fuel Cost Savings – Generation Participation
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
2012 2016 2020Year
Generation Participation
Hydrogas
SJ 7‐10
PS 3&4
SJ CC
Ag CC
SC 5&6
AG 1&2
RE
AES
Eco
PS 3&4
SJ 7‐10
Renewables Renewables
PS 3&4
AG CC AG CCSJ CC
SJ CC SJ CC
9.5%
9.5% 15.4%11.73%
4.1%5.7%
10% 10%
Under economic dispatch renewable energy will substitute inefficient generation from old infrastructure
$0.21/kWh
$0.24/kWh
12% 15%
Fuel Cost Savings
0
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
2012 2016 2020
$
Year
Fuel Savings from Renewable Energy
Renewables
PS & SJ 7‐10$518,000,000
$544,000,000
Detail Fuel Cost Savings
0
200000000
400000000
600000000
800000000
1E+09
1.2E+09
1.4E+09
1.6E+09
12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
$
Year
Savings from Renewable Energy
Savings
Aguirre Gas PortGas from Atlantic
Gas to SJ CCGas from US
Cumulative Savings = $17.6 billion dollars!
The Future of Solar
‐USA Average Prices‐No MTR Requirements‐No Hurricane wind requirements‐Soft costs in PR are substantially higher
$/KW
H
$‐
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
North Carolina
New
Jersey
Massachusetts
Southe
rn Califo
rnia
California
Puerto Rico
Austin Texas**
D. Pow
er/Delaw
are
USV
I
Guam
Dominican
Rep
ublic
Indianapolis, Indiana
Mexico
Hawaii
Conn
ecticut
Ontario, Canada
State Incentives
North Carolina – NC State Credit = 30% of the Cost of a Project
New Jersey – SRECs started at $.60/kWh and have gone down to $.10/kWh
Massachusetts – SRECs started above $.28/kWh and still remain above $.24/KWh
California
Only for large Utility‐Scale with 100’s of MW, Considerably higher irradiance. Well established, low risk market, TOU adjustments.
Don’t be fooled by PPA PricingAll USA Projects with either Federal ITC or Cash Grant of 30%
Environmental Compliance
• PREPA has to comply with EPA’s Mercury and Air Toxic Standards (MATS) by 2015
• Renewable energy does not produce any emissions• EPA is also working on a greenhouse gas standard• The 12% of renewable energy production required by law 82 and 83 of 2010 will provide by 2015:– Reduction of 1,600,000 metric tons of CO2 Emissions, equivalent to:
• Emissions from 325,000 cars in a year• 175,000,000 gallons of gasoline not consumed• Carbon Sequestered by 1,300,000 acres of forests in one year
ECONOMIC DEVELOPMENT AND JOB CREATION
Renewable Energy Fundamentals
19,000 jobs(direct, indirect,
Induced)
Reality (US)
• A solar system is installed every four minutes in the U.S.1
• There are 142,698 jobs throughout the industry. A 20 percent increase since 2012.1
• Solar firms were adding 56 new workers every day last year.1
• In California, 13 jobs are created per MW of Solar PV installed.2
• In the US, 16 jobs are created per cumulative MW of both solar and wind installed.3
Sources: 1. Solar Foundation2. USC Study3. NREL
Potential Reality for Puerto Rico
Puerto Rico – Law 82
Total employment= 18,825*
MW = 1,261Jobs/MW= 14.9
Puerto Rico – First Phase
Jobs/MW= 14.9Allowed MW = 600
8,940 jobs
Job Creation Impact per MW
*Study prepared by Estudios Técnicos, Inc.
PV Output Variability
Slide from NREL’s Utility ScalePV Variability WorkshopOctober 7, 2009Ben Kroproski, PHD
Long Term
Short Term
PREPA’s Generation
• Dominated by large, steam drum (boiler) steam generating units from 200 MW to 450 MW each.
• Very slow response to frequency deviations.• Lack of interconnection to other grids results in a frequency bias between 20 and 35 MW/0.1Hz – Frequency is very susceptible to load/generation changes.
PREPA MTR#7: Ramp Rate Control
• A 10 % per minute rate limitation (based on AC contracted capacity) shall be enforced. This ramp rate limit applies both to the increase and decrease of power output and is independent of meteorological conditions. The ramp rate control tolerance shall be 5%.
How Variable is PV in Puerto Rico?
Histogram of 10‐min vs 1‐min ramps for a 20 MW AC facility at San Juan
How Variable is PV in Puerto Rico?
85% Ramp DownFrom the Histogram, this ramp could occur less than once in a year
The Solution
• For the 20 MW PV facility, and based on single point irradiation data, the resulting solution to comply with the ramp rate control function is:– An energy storage system that could provide a peak power capacity of approximately 10 MW (50% of PV Contracted Capacity)
– With an energy capacity of approximately 2.1 MWh which accounts for the ramp rate and frequency regulation requirements plus the battery inefficiency
Solution Alternatives• Flywheels – Limited availability. Not considered bankable by some
financing institutions. Medium cost.• Battery Energy Storage Systems – Large availability and bankable.
Considerable experience. Can react within milliseconds. High cost• Diesel Generators – Large availability, considerable experience,
bankable, need longer environmental permitting and will need some energy storage for the instantaneous response while they start. Low cost.
• Short Term Cloud Forecast Systems. Limited availability. Not considered bankable by some financing institutions. Low cost but will require PV facility to ramp down before the cloud arrives = loss of revenue.
• A combination of the above.• Most producers have opted for battery energy storage systems
(BESS).
BESS Performance
20 MW Facility in Arizona53% PV Down Ramp40% peak storage capacity
Full Day Plant OutputWithout BESS
Ramp Down Close-UpWith BESSGraphics Provided by SOLON
BESS Performance
Graphs Provided by SAFT
335 340 345 350 355 360
10
15
20
Time(min)
Pow
er (M
W)
335 340 345 350 355 360-5
0
5
10
Time(min)
P b
att (
MW
)
335 340 345 350 355 36030
40
50
60
70
Time(min)
SO
C (%
)
P pvP net
20 MW Facility in Hawaii70% PV Down Ramp50% Peak Power Storage
4 non‐compliant scans
BESS Performance
335 340 345 350 355 360
10
15
20
Time(min)
Pow
er (M
W)
335 340 345 350 355 360-5
0
5
10
Time(min)
P b
att (
MW
)
335 340 345 350 355 36020
40
60
80
Time(min)
SO
C (%
)
P pvP net
20 MW Facility in Hawaii70% PV Down Ramp54% Peak Power StorageFully compliant
Graphs Provided By SAFT
What is the risk to PREPA’s grid?
Histogram of 10‐min vs 1‐min ramps for a 20 MW AC facility at San Juan.Area in red represents outlaying statistical ramps with less than 0.08%occurrence that are outside the design parameters. The ESS will mitigate these ramps and there will be a deficit to be supplied by other ESS, if the deficit resulted in a frequency deviation.
ESS Peak Power and Response to a Statistical Outlying Ramp
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
0 50 100 150 200 250 300
PV
10.8MW
10.0MW
9.0MW
8.0MW
7.0MW
6.0MW
Deficit
2.55
2.73
3.53
4.51
5.53
6.51
PV Down Ramp (80.5%) with yearly occurrence probability less than 0.00048
Graph Provided By SAFT
Effect of Statistical Outlying Ramp on PREPA’s Grid Frequency
• Assuming a low frequency bias value for PREPA’s system of 15MW/0.1 Hz:
ESS Peak Power(MW)
Drop or Deficit(MW)
Grid Frequency Deviation (Hz)
#FCCR to Create Major Deviation
6 6.51 0.043 6.98
7 5.53 0.035 8.57
8 4.51 0.030 10
9 3.53 0.024 12.5
10 2.73 0.018 16.67
10.8 2.55 0.017 17.65
FCCR = Facilities with Coincident Case Ramps. How many facilities must be experiencingthe statistically outlying ramp at the same time in order to create a frequency deviation of 0.3 Hz.
Portfolio Effect
The portfolio effect has not been consideredin the design of the BESS ramp control.
Not all facilities are experiencing cloudsor the same type of clouds at the sametime. The more facilities there are, the lessvariable the solar resource becomes.
Result: PREPA will have more energy storage than is actually needed and better frequency regulation.
Effect of Statistical Outlying Ramp on PREPA’s Grid Frequency
• An 80.5 % down ramp (case ramp) with a yearly occurrence probability of less than 0.00048 will cause a drop (deficit) in the required ramp of 2.73 MW and a potential for a frequency deviation of only 0.018 Hz
• This deviation is practically within the dead‐band of frequency regulation of 0.012 Hz.
• For PREPA to experience a large frequency deviation of 0.3 Hz., seventeen 20 MW PV facilities must experience the case ramp simultaneously.
• Even for this very unlikely event, the rest of the ESS fleet would correct the situation within milliseconds.
• When considering the portfolio effect, the likelihood of this event ever happening is close to zero.
Unit Commitment Challenge• Reciprocating Engine Power Plants
– No maintenance penalties for startup/shutdown (they can be started and stopped many times without any harm to the equipment or increments in maintenance costs).
– Quick start and stop.– Very high efficiency (47% ‐ 50%), even at partial loads.– When several are used to form a large power plant (100MW to 200MW) the power plant’s maximum efficiency is maintained from 10% to 100% of plant loading.
– No consumption or discharge of water.– No efficiency de‐rating for high ambient temperature, humidity and altitude.
Unit Commitment Challenge
0 25 50 75 100Plant Output (%)
30
40
45
50
Effi
cien
cy (%
)
1StEngine
2ndEngine
3rdEngine
4thEngine
Typical Range Single Unit Gas Turbine
55
High Efficiency at all power plant outputs
Financing Challenges• The costs of development for utility scale solar in Puerto Rico
provide rate of returns between 8% to 12%. Therefore designs need to be optimized, project costs must be managed carefully and risks must be analyzed and mitigated.
• Results of the previous local bond market de‐rating:– Long term financing (18yr) no longer available– 7 year Mini‐perm loan financing, renewed every 7 years at that
moment’s interest rate is the available option– Interest rate increased 200 basis points– New requirement of an up‐front financing fee of 2.25% of the total
value to be financed– Each 7 year refinancing will require an additional financing fee of 1.5%
of the balance being financed• Unknown result of recent bond derating
Conclusions• Puerto Rico has the fundamentals for a large renewable energy market.• Ramp control and frequency regulation requirements can be easily met with a battery
energy storage system, although at a high capital cost.• Not only will a BESS mitigate the variability of solar PV but, the cumulative effect of 270
MW of peak power energy storage capacity (50% of the 600 MW renewable capacity allowed by PREPA) is in excess of what will ultimately be needed (due to the portfolio effect, PV Field dispersion, etc.) and will considerably improve grid stability and reliability.
• For the longer term situation of unit commitment, there are alternatives for PREPA that will allow a higher penetration of renewables without affecting energy costs, including long duration energy storage systems and power plants based on modern combustion engine technology.
• Recommendation to PREPA: The MTR for ramp control should be addressed by pure frequency regulation. Reallocation of the energy storage resource to ramp rate control is at best neutral, and at worst opposes the desired frequency response.
• Market uncertainty and recent economic situation make financing renewable energy projects a challenge.
Thanks!
• Thanks to the following companies for their input and effort:– A123– Astrom Technical Advisors (ATA)– Green Power Technologies (GP Tech)– General Electric– Saft– Solon Corporation– Xtreme Power– All the developers and companies that participated on APER’s Technical Committee